Reduced call for OPEC oil

From the oil demand point of view, non-OPEC production is expected to grow in the fourth quarter of 2003 and in 2004, especially Russian production, which should be good news for the aframax market.

Petroleum Intelligence Weekly (PIW) estimates that the countries outside OPEC will increase oil production by almost two million barrels per day (mbd), 0.2 mbd more than the estimated seasonal increase. PIW thus projects OPEC’s production 4Q03 to be below the quota that was set in June of 25.4 mbd.

The largest increase in oil production outside OPEC is expected in the North Sea where the Grane (0.2 mbd) and Fram West (0.06 mbd) fields are set to start production. This will add to a seasonal recovery in older fields following summer maintenance, meaning that in total North Sea oil production is projected to increase from 3Q03 to 4Q03 by 1.1 mbd. PIW also estimates that there will be an increase of 0.4 mbd from Canadian tar sands and new Gulf of Mexico fields. Elsewhere, the recently started Chad pipeline and the trans-Andean line in Ecuador are expected to contribute to a 0.3 mbd rise in oil production from developing countries.

OPEC oil production peaked in October 2000 at 29.5 mbd, but has since September 2001 been below 27 mbd and was 26.1 mbd in July 2003, according to IEA.